Correlation Between Argo Gold and Dynacor Gold

Can any of the company-specific risk be diversified away by investing in both Argo Gold and Dynacor Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Argo Gold and Dynacor Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Argo Gold and Dynacor Gold Mines, you can compare the effects of market volatilities on Argo Gold and Dynacor Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Argo Gold with a short position of Dynacor Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Gold and Dynacor Gold.

Diversification Opportunities for Argo Gold and Dynacor Gold

-0.18

Correlation Coefficient

Argo Gold  Dynacor Gold

Good diversification

The 3 months correlation between Argo and Dynacor is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Argo Gold and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines and Argo Gold is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Argo Gold are associated (or correlated) with Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Argo Gold i.e., Argo Gold and Dynacor Gold go up and down completely randomly.

Pair Corralation between Argo Gold and Dynacor Gold

Assuming the 90 days horizon Argo Gold is expected to generate 3.59 times less return on investment than Dynacor Gold. In addition to that, Argo Gold is 3.11 times more volatile than Dynacor Gold Mines. It trades about 0.01 of its total potential returns per unit of risk. Dynacor Gold Mines is currently generating about 0.09 per unit of volatility. If you would invest  385.00  in Dynacor Gold Mines on August 31, 2024 and sell it today you would earn a total of  44.00  from holding Dynacor Gold Mines or generate 11.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Argo Gold  vs.  Dynacor Gold Mines

Argo Gold

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Argo Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Argo Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dynacor Gold Mines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dynacor Gold Mines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Dynacor Gold may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Argo Gold and Dynacor Gold

The main advantage of trading using opposite Argo Gold and Dynacor Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Gold position performs unexpectedly, Dynacor Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dynacor Gold will offset losses from the drop in Dynacor Gold's long position.

The idea behind Argo Gold and Dynacor Gold Mines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.